Measuring the Ups and Downs of our Industry

2015 is closing in a period of very modest growth. Per Chart 1 the October Global Purchasing Managers’ index (PMI) moved further into expansion territory with a value of 51.4. Contributing to this rise were higher regional PMIs for Europe and Japan (both 52.4), little change in the USA (50.1) and improved values for China (48.3), S Korea (49.1) and Taiwan (47.8). PMIs less than 50 indicate a shrinking manufacturing sector.

How did the third quarter world electronics industry perform? 3Q’15 revenue growth depends on how it is calculated. Growth can be measured at fixed or fluctuating exchange rates for multi-c urrency consolidations. Financial consolidations to US dollars using fluctuating exchange rates are depressed when weak non-dollar currencies are converted to stronger dollars. A group of 175 global OEMs (Chart 2) saw revenues decline 3.8% in 3Q’15 vs. 3Q’14 when compared based on fluctuating exchange rates. However the same companies grew 4% when consolidated at fixed 2014 exchange.

Multi-national companies of course report their consolidated sales at actual (fluctuating) exchange rates. For 3Q’15 this impact was substantial (+4% at fixed exchange vs –3.8% at fluctuating exchange). Chart 3

Chart 4 provides monthly electronic equipment shipments by region. Notice the significant consumer electronics driven seasonal peaks in the China values. For consumer goods sales peak before the Christmas holidays and then plunge sharply –remaining depressed until late summer.

Chart 5 gives Custer Consulting Group’s current estimate of 3Q’15 vs 3Q’14 growth of the global electronic supply chain. This information is based on some estimates (due to later reporting companies) but it is close to a “final” 3Q’15 estimate.

Charts 6 and 7 show 3Q’15 growth for the U.S. and European supply chains.

Fluctuating demand is a key challenge in the electronics industry!

End Markets

WORLD

Global consumer electronics market will expand at a 15.4% CAGR to US$3 trillion by 2020. –Future Market Insights

India’s electronic goods imports grew from $2.85 billion in May 2015 to $4.38 billion in September.

MOBILE COMMUNICATIONS

Smartphone shipments increased 6.8% y/y to 355 million in 3Q’15. –IDC

China smartphone shipments grew 11.2% sequentially to 101 million units in 3Q’15. –Digitimes Research

Taiwan-based handset brands and ODMs’ combined smartphone shipments declined by over 10% q/q to 19.5 million units in 3Q’15. –Digitimes Research

COMPUTERS & PERIPHERALS

Tablet shipments declined 12.6% y/y to 48.7 million units in 3Q’15. –IDC

EMEA PC shipments declined 23% y/y to 18.4 million units in 3Q’15. –IDC

AUGMENTED AND VIRTUAL REALITY

Augmented reality market will grow at an 80% CAGR to $56.8 billion USD by 2020. –MarketsandMarkets

Head mounted display market is increasing at 45% CAGR from US$0.4 billion in 2012 to US$20.5 billion by 2022. –Transparency Market Research

Smart eyewear (augmented reality and virtual reality smartglasses) market will grow from $7 billion in 2019 to almost $45 billion by 2026. –IDTechEx Research

AUTOMOTIVE ELECTRONICS

Light detection and ranging enabled passenger vehicle market revenues will grow from $51 million in 2014 to $141 million in 2021. –Frost & Sullivan

END OF LIFE

Electronic recycling market is estimated to grow at a 23% CAGR from US$9.8 billion in 2012 to US$41.3 billion in 2019. –Transparency Market Research

LCD DISPLAYS, TOUCH SCREENS

LCD TV shipments grew 8.3% q/q to 53 million units in 3Q’15. –WitsView

High dynamic range TV shipments will grow from 2.9 million in 2016 to 32.6 million in 2019. –IHS

Taiwan LCD TV shipments increased 16% q/q to 9.3 million in 3Q’15. –Digitimes Research

ROBOTICS AND AUTOMATION

Robotics spending is expected to grow from $15 billion in 2010 to $65 billion by 2025. –Boston Consulting Group

Factory automation & industrial controls market will grow at a 7% CAGR from $197 billion in 2015 to $276 billion by 2021. –Mordor Intelligence

Home automation market will expand at a 26% CAGR from USD 4.4 billion in 2014 to US$21.6 billion by 2020. –Transparency Market Research

Intelligent machines market will more than triple to $153 billion by 2020; robots will be performing 45% of manufacturing tasks by 2025, versus 10% today. –Bank of America

Industrial controls and robotics market will develop at a CAGR of 5.6% from US$102 billion in 2012 to US$148 billion in 2019. –Transparency Market Research

IT robotic automation market is expanding at a 60.5% CAGR from US$0.18 billion in 2013 to US$5 billion by 2020. –Transparency Market Research

Machine vision technology market is growing at an 8.4% CAGR from US$15.7 billion in 2014 to US$28.5 billion by 2021. –Transparency Market Research

China robot sales will almost triple from 57,000 in 2014 to 150,000 by 2018. –International Federation of Robotics

EMS, ODM & Related Assembly Activity

AWS Electronics added an Asys laser marking machine.

Benchmark Electronics acquired Secure Technology from Vance Street Capital for $230 million in cash.

BIT Group and EDAN Instruments established a medical instrument outsourcing manufacturing JV in Shenzhen, China.

Circuit Check Inc. completed a CSIA certification audit.

cms electronics added a Hybrid 5 Assembléon machine and a Schmoll optical drilling machine.

Conecsus began offering solder dross, metals analysis lab services.

Connect Group named Klaus Kroesen, Director.

Electronics Technicians Ltd passed AS9100 re-certification program.

Elite Manufacturing Services installed an Aegis FactoryLogix NPI system.

Epec hired Todd Barham as Military & Aerospace Business Development Manager.

Escatec

…appointed Chris Eden, Director of Business Development.

…launched Value Analysis Value Engineering service.

Evotronic installed an additional MyData pick and place machine.

Flex sold its manufacturing facility in Ronneby, Sweden to Orbit One.

Foxconn/ Hon Hai

…accelerated its entry into smart accessories, smart bicycles and voice-controlled small-size robot markets.

…acquired 20% stake in Bamboo Distribution.

…and Alibaba are building a start-up incubation base in Hangzhou, China.

…is building phones for OnePlus at its Sri City facility in Andhra Pradesh, India.

…integrated its server business into its telecommunication product business.

…is investing over CZK 1 billion (around EUR 37 million) to expand its Pardubice facility in the Czech Republic.

…received 100% stamp duty exemption, subsidized power supply from Maharashtra state as incentive to invest $5 billion (roughly Rs 32,000 crore) over the next five years.

…was ranked as the largest invention patent applicant in Taiwan in 3Q’15.

Innovative Manufacturing Source expanded its Calgary, Canada facility from 18,000 SF to 40,000 SF.

Integrated Micro-Electronics CZ added a Baxter collaborative manufacturing robot.

Jabil acquired Shemer.

Kimball Electronics

…appointed Gregory Lampert, Lead Independent Director.

…opened a 6,150 M2 facility in Olympia Park, Remetea Mare, Romania.

Lava is investing Rs 500 crore to set up a cellphone manufacturing unit in Tirupati, Andhra Pradesh, India.

Libra Industries

…began offering design services.

…registered its Dallas, Texas facility with the Food and Drug Administration as a supplier to medical OEMs.

Lite-On Technology plans to invest at least NT$85 million (US$2.6 million) in a joint R&D center at the National Tsing Hua University over the next five years.

Noca and Simpro invested in a new SMT-production line, which includes a DEK Horizon 03iX, three ASM Siplace SX SMT machines and an AOI machine from Saki.

Orbit One recruited former VP of Flextronics SBS, Mattias Lindhe to integrate a manufacturing facility in Ronneby, Sweden it recently acquired from Flex.

OSRAM SYLVANIA added a SMT production line for LED modules at its Hillsboro, New Hampshire manufacturing plant.

Plexus closed its Fremont, California manufacturing facility.

RGB Digital Technology’s television assembly plant in Bang Pu, Thailand had two buildings that were destroyed by a fire.

Ryder EMS received an Apple MFi 6.4 license for Design and Manufacturing.

Season Group appointed Joseph Likens, VP of Global Supply Chain.

TT Electronics-IMS implemented Aegis MES in all of its manufacturing facilities.

Varitron Group installed a second KISS-103IL in-line selective soldering system from ACE Production Technologies.

Vexos appointed John Wilkinson, SVP & GM of its LaGrange, Ohio manufacturing facility.

Videocon is setting up a mobile handset assembly plant in Punjab, India.

Zentech added a Nordson DAGE xi3400 AXI system to its Baltimore, Maryland facility.

PCB Fabrication

World PCB shipments will see negative 1.5-2% growth in 2015 in US$ terms partly due to reduced value of local Asian currencies values against the US Dollar. –Dr. Hayao Nakahara

China’s overall PCB growth may end up to be only 1% in 2015. –Dr. Hayao Nakahara

Japanese PCB shipments started to decline in the middle of September 2015. –Dr. Hayao Nakahara

South Korean PCB shipments are expected to decline 6% y/y in 2015 after declining 15% y/y in 2014. –Dr. Hayao Nakahara

Taiwan PCB players are turning down slim-profit orders from smartphone vendors and focusing on other segments, including servers, telematics devices and IoT applications.

American Standard appointed William Hackett, Director of Sales.

AT&S is building a plant in Chongqing, China that is scheduled to start operation in early 2016.

Canadian Circuits installed a Pluritec Inspecta XR75 X-Ray drilling machine.

Cicor consolidated its Moudon facility with its Boudry location and relocated its Ticino sales office in Quartino to its ES Division’s headquarters in Bronschhofen, Switzerland.

CIPSA CIRCUITS installed an Orbotech Fusion AOI and a Sprint 120 Inkjet system in Spain.

Circuit Connect named Paul LaLiberte, Operations Manager.

eXception PCB Solutions added a Direct Optical Registration system from DIS.

Firan Technology Group completed a Rockwell Collins audit of its joint venture, FTG Printronics Circuits, located in Tianjin, China.

GUH Holdings plans to reduce its reliance on the revenue contribution of printed circuit boards by 30% over the next five years.

Hybrid Electronics Australia designed patented and manufactured “titanium electronic circuits”.

IMI Czech added a new image measurement system from Keyence.

Loughborough University received £3.9m grant from UK’s Engineering and Physical Sciences Research Council to develop 3D printed RF PCBs.

Trackwise received AS9100C aerospace quality certification.

TTM Technologies closed its Cuyahoga Falls, OH plant and combined its Akron, Ohio and Milpitas, CA plants with nearby plants in North Jackson, OH and Silicon Valley, CA.

UL opened a PWB performance testing lab in Taipei, Taiwan.

Materials & Process Equipment

Conductive ink and paste business will generate $2.2 billion in revenue in 2015. –MarketResearchReports.Biz

Surface Mount Technology market will grow at a 9.8% CAGR to $4.7 billion by 2020. –MarketsandMarkets

AGY expanded its S-2 Glass and L-Glass specialty glass fiber product lines.

All Flex developed a polyimide-based material specifically for high te mperature flexible circuits and flexible heaters.

Arlon reintroduced 85NT, nonwoven aramid laminate and prepreg system.

ASM Pacific Technology and SPIL established a joint investment entity to develop and manufacture molded interconnect substrates.

BEST added a new YAG laser system.

Chemtura discontinued manufacture and sale of Hexabromocyclododecane (HBCD)-based flame retardant.

DuPont Microcircuit Materials launched a suite of in-mold electronic inks designed for printing circuits directly onto plastic substrates.

Foxconn subsidiary, First Special Material is constructing a factory in Henan Province, China.

Juki Automation Systems appointed Hoon Choi and Davi Migri as Service Engineers in the U.S.

Keysight Technologies changed its organizational structure to include a centralized corporate planning and technology team, and moved to three customer-focused business groups: Communications Solutions, Industrial Solutions and Services Solutions.

MacDermid spent $1.5 to $2 million to convert its empty fourth floor of its Freight Street building in Waterbury, Connecticut into electronics research and development labs.

Nano Dimension appointed Ofir Baharav to its Board of Directors.

Nihon Superior celebrated its 50th anniversary.

OM Group was acquired by Apollo Affiliated Funds in a partnership with Platform Specialty Products.

OMRON completed its acquisition of Adept Technology.

Orbotech introduced a new family of Direct Imaging solutions for solder masks.

Phidias introduced a low cost machine that can produce virtually all components required to make complete, finished products, including PCBs and 3-D printing with plastics.

PVA opened a new facility in Helmond, The Netherlands.

Rogers

…appointed Keith Barnes to its board.

…VP of Finance and CFO, David Mathieson will retire effective December 31, 2015.

Semblant appointed George Holmes, Chief Commercial Officer.

Ventec Central Europe appointed Didier Mauve, Sales & Marketing Manager Europe.

VJ Electronix named Nigel Palmer, U.S. Western Regional Sales Manager.

Yokogawa’s European calibration laboratory received ISO17025 accreditation for power measurements at up to 100 kHz.

ZESTRON Americas appointed Sean Harvey, Regional Sales Manager for Western American and Canadian regions.

Semiconductors & Other Components

SEMICONDUCTOR

sales fell 2.8% y/y to $85.2 billion in 3Q’15. –SIA/ WSTS

revenue is expected to fall 0.8% y/y to $337.8 billion in 2015. –Gartner

capital spending will decline 1% y/y to $63.9 billion in 2015. –Gartner

firms have announced more than $100 billion in mergers and acquisitions in 2015. –Dealogic

industry will rise at a 4.9% CAGR from $362 billion in 2015 to $450 billion by 2019. –IC Insights

Polished and epitaxial silicon shipments will total 10,042 million square inches in 2015, 10,179 million square inches in 2016 and 10,459 million square inches in 2017. –SEMI

IC market is forecast to fall 1% y/y in 2015. –IC Insights

China consumed nearly 21.6% (valued at $12 billion) of world’s DRAM and 29.1% ($6.67 billion) worth of NAND flash in 2015. –DRAMeXchange

China’s share of the global fabless IC sales has expanded steadily from 7.1% in 2009 to estimated 18.5% in 2015. –TrendForce

North American semiconductor equipment industry posted $1.60 billion in orders worldwide in September 2015 (based on a 3-month average basis) and had a book-to-bill ratio of 1.07. –SEMI

U.S. image sensors market is growing at an 11.1% CAGR from USD 2.0 billion in 2011 to USD 3.7 billion in 2017. -Transparency Market Research

Automotive semiconductor market will grow 5.7% y/y from USD 28 billion in 2014 to USD 29.6 billion in 2015. –Research in China

Optical sensors market is growing at a 7.65% CAGR from US$14.5 billion in 2014 to US$20.9 billion by 2020. – Mordor Intelligence

O-S-D (optoelectronics, sensors and actuators, and discrete semiconductors) product revenues are expected to grow 3% y/y to record-high US$66.4 billion in 2015. –IC Insights

Pure-play foundry market will grow 6.1% y/y to US$44.9 billion in 2015. –IC Insights

RFID market total sales will reach $10 billion in 2015. –IDTechEx

Semiconductor 200mm wafer fab capacity is forecast to grow from 5.2 million wafer starts per month in 2015 to 5.4 million wspm in 2018. – SEMI

Tablet applications processor market declined 28% y/y to US$679 million in 2Q’15. –Strategy Analytics

Wireless power revenue is expected to grow from $1.3 billion in 2015 to $17.9 billion in 2024. –Navigant Research